Despite recovery, credit lags in large areas

On-time payments and access to credit improve

WASHINGTON, Oct 25, (AFP): As the US recovery has gradually improved economic prospects of families, on-time payments and access to credit have improved, but there remain large areas where people are being left behind.

Many people still cannot access traditional forms of credit, or have high credit delinquency rates, according to the New York Federal Reserve Bank’s Community Credit report released Monday.

And even in healthy credit states there are pockets of serious problems, according to the data, which can provide tools for local governments and community groups to target their efforts. There are counties that have “really low or adverse numbers and have had those numbers for years. It’s a tale of two cities, the good right next to the troubled,” said Kausar Hamdani, senior vice president in the Communications and Outreach Group at the New York Fed.

For the entire United States, the share of adults with a credit card or a home equity credit line improved to 69.7 percent at the end of 2015, up from the post-crisis low of 67.7 percent in 2013.

But far fewer people can count on these forms of credit than before the crisis, as the rate was 75 percent in 2005, the report showed.

The data show more people are making sure to pay their bills on time. Those who were never more than 30 days past due on their credit payments in each quarter, the on-time payers, rose to 77.7 percent last year, from a crisis low of 74.1 percent in 2009.

And it appears Americans have learned some lessons about credit from the crisis: the on-time payer rate is well above the 76.3 percent seen before the crisis in 2005.

But the New York Fed’s online community credit heat maps, which provide pictures of the credit status by state and county for the past decade, illustrate in bright colors how the good news at the national level is countered by vast areas of not-so-good news.

In nearly half the states, mostly in the South and Midwest, less than 70 percent of adults have access to a credit card or home equity line, and in seven Southern states the rate is less than 60 percent.